The Governor of New York has dropped plans to introduce a sales tax on CSDs in the state.

Along with Senate Majority Leader Malcolm Smith and Assembly Speaker Sheldon Silver, Governor David Paterson confirmed yesterday (11 March) that $1.3bn in tax increases included in the proposed 2009-10 Executive Budget have been eliminated.

Included in the proposed increase was the plan to impose an additional 18% rate of sales and compensating use taxes on fruit drinks that contain less than 70% natural fruit juice and non-diet soft drinks, sodas and beverages.

"The proposed tax increases we are eliminating today were only put forward as a last resort when the deficit ballooned to an unprecedented level," said Governor Paterson. "Now that enhanced federal funding is available, our highest priority must be to provide targeted relief to those who need it most during this economic crisis - average New Yorkers struggling to make ends meet."

Senate Majority Leader Smith added: "If implemented, these taxes would have impaired small businesses and adversely impacted middle income families. In this fiscal crisis, taxes should be the last thing we consider, not the first."

Assembly Speaker Sheldon Silver said: "We believe it is particularly important not to increase the cost of those basic 'quality of life' products and services that help families tolerate times of hardship and uncertainty."

US trade body the American Beverage Association (ABA) welcomed the announcement yesterday, saying: "We thank Gov. Paterson and lawmakers for taking the concerns of New Yorkers to heart and responding in a way that protects their jobs and doesn't add to their financial burdens during these tough economic times.

"As the budget process unfolds, we look forward to working with the Governor and lawmakers to address the state's budgetary needs in a manner that doesn't cost consumers more money or put their jobs at risk." the ABA said.